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Wholesale Dealer Bond

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What is a Wholesale Dealer Bond?

In several states, auto dealers operating wholesale businesses are required to hold a valid license to do business. Licensing requirements vary, but it is likely that a wholesale dealer bond is a necessary part of the process. A wholesale dealer bond is a type of license bond that ensures a wholesale auto dealer will comply with state laws when working with customers. If a dealer fails to act according to regulations, a customer has the opportunity to file a claim against a wholesale dealer bond for compensation, up to the limit of the bond.

A wholesale dealer bond operates like other surety bonds, creating a contract between three parties. The obligee is the state licensing authority requiring a bond to be posted, while the principal is the wholesale auto dealer that must post a bond. The surety company provides the bond to the principal and extends a credit line to cover claims. The wholesale dealer is responsible for repaying any legitimate claim amounts covered by the bond.

What Does a Wholesale Dealer Bond Cost?

One of the factors used to determine the price of a wholesale dealer bond is the total bond amount required by the state. This varies depending on state regulations, ranging from $10,000 to $150,000. Fortunately, wholesale dealers are not responsible for paying the total bond amount. Only a small percentage of the total is charged as the bond premium, typically between 1 and 10% of the bond.

The bond premium you pay as a wholesale dealer depends on your personal credit history as well as your business financials. A low credit score and a credit history that includes negative marks like bankruptcy or civil judgment may lead the surety company to believe you are a high-risk bondholder. Your wholesale dealer bond premium is higher to offset this risk.

How Do I Get a Wholesale Dealer Bond?

You can submit a short online application to start the process of securing a wholesale dealer bond. The surety company provides you with a bond quote after reviewing your application details.

Frequent Questions

How much does this bond cost?

The cost is usually 1 – 10% of the bond amount. Keep in mind that pricing varies based on the bond amount, and your financial strength.

What is the process?

Apply and get approved on our website, sign the surety agreements, and we will ship the bond out. If you would like to learn more about what surety bonds are and how they work, you can read our detailed guide here.

Can I get this bond with bad credit?

Yes, it’s possible, but bad credit usually results in higher rates.

Does it matter where I get a bond?

Yes. We provide the lowest rates possible as a result of the large volume of bonds we write.

What if a false claim is filed?

You must contact us immediately, as we have a team of claim specialists here to find a resolution for you. Keep in mind, it is crucial that you work with an expert in the surety industry. Learn more about how to ensure you choose the proper bond company.

Are you looking for a different type of bond?

You can take a look at our full list of license and permit bonds.

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Jennifer Henson
Our company has been with JW Surety for several years now so when we needed to obtain a bond for a new company, we immediately went to them for help. Our rep, Melissa, was extremely helpful and prompt which made the process extremely easy for me.
David Tillotson
Trying to get a local Surety Bond was like driving a car on three tires. I searched Surety Bonds and found JW Surety Bonds. I got online and filled out the information and with in 30 minutes received a response from Melissa. She was informative, friendly and helpful. One more super satisfied customer.

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About JW Surety Bonds
We are a family owned and operated agency established in 2003. We started with just two people, and grew to become the largest volume bond producer in the nation with 50+ employees. Since day one, our team focus has been on providing real-time online quotes, an easy process, and the best in claims defense. Learn more about our company.